Most franchise agreements include a non-competition covenant preventing a franchisee from competing with the franchisor during the term, and in many cases after the term of the agreement.

One of the recent concerns for both franchisors and franchisees in the US has been the uncertainty created by regulatory efforts to have franchisors held liable as a “joint employer” of the employees of their franchisees. Most prominent of these efforts has been the National Labor Relations Board’s (“NLRB”) actions asserting that McDonald’s is a joint employer of its franchisees’ employees.

The answer is that it depends. The Ontario Superior Court of Justice considered the matter in 2313103 Ontario Inc. et al v JM Food Services Ltd. et al. in the context of whether the shareholders of the corporate franchisee can invoke the statutory rights afforded to franchisees under the Arthur Wishart Act (Franchise Disclosure), 2000 (Ontario) (“Act”).

Franchise systems come in all shapes and sizes, and each has its unique elements. However, there are common aspects that underpin well-run franchise systems. A healthy franchisee-franchisor relationship is a good indicator of a healthy franchise system. Here are several elements that reflect a strong franchisee-franchisor relationship.

Download the April 2016 issue of the Dickinson Wright Franchise & Distribution Law Newsletter.

The Quebec Court of Appeal’s April 15, 2015 decision is now the last word in a landmark case brought by 21 Dunkin’ Donuts Quebec franchisees against their franchisor, Dunkin’ Brands Canada Ltd. On March 17, 2016, the Supreme Court of Canada dismissed, without reasons, the franchisor’s application for leave to appeal the Quebec Court of Appeal decision.